For many South Africans, applying for a home loan can be a stressful procedure. This is perhaps the biggest financial investment you will ever make. There is much that South African buyers don’t know about the process of applying for, and the responsibilities that come with a home loan. As a first-time buyer, do you know what questions to ask?

Is it difficult to apply for a home loan?

First-time buyers find the challenges of meeting the criteria daunting with what seems like endless paperwork, red tape and rising property costs. However, once you have all the information about the home buying process at your fingertips, you will discover that the process is relatively straightforward and simple.

Whether you are a first-time buyer or you are seeking to purchase a second property as an investment, Homeloan Junction can help you by putting our wealth of resources at your disposal. Here are 5 home truths about getting a home loan that will get you well on your way to finding that dream family home.

Create a good credit record

Firstly, it is important to have a good credit record before applying for your home loan. The banks are unlikely to approve a loan for first-time applicants if there is no credit record or history of being able to pay consistently. Even if you have saved for a deposit, your application may not be approved simply because you have no other loans. So, before putting in your application for a home loan, spend some months creating a good credit history by paying smaller loans at the right time, like your cell phone or clothing accounts. Obtain a free credit report online and check whether you have used enough credit products and whether you have been a reliable borrower. If there are any errors in the report, request to have them fixed so that you can improve your chances of obtaining a loan.

Decrease your monthly disposable income

Banks are also not willing to offer loans to high risk debtors. Decreasing your monthly disposable income by reducing non-essential debt and where possible paying off accounts will help your chances of home finance approval. The most important thing is for you to pay your accounts and outstanding credit card balances reliably and on time. Do not close accounts which you have just repaid, keep them open and use them.

Deposit preparation

A home buyer is expected to contribute to the purchase of the property by paying a deposit. It determines the loan-to-value ratio, which expresses the loan amount as a percentage of the property’s sale price. The larger the deposit is the lower this ratio is and the less you will have to borrow. This will increase your chances of home loan approval and help you save on interest payments as banks can then offer a lower interest rate. That is why it makes sense for you to save for a deposit to use towards the purchase of a house. Use our savings calculator to work out how much you need to save and for how long, to save for a deposit for your home loan.

Work within a budget

It is best to consider a property that is within your budget and that you will be able to repay. While your first home may not be the mansion of your dreams, it is important to ensure that it meets all your current and medium-term needs. In this way you will be able to afford your family home without getting into serious debt. At Homeloan Junction, we provide services and online tools that can help you plan ahead of time. Use our home loan calculator to decide on total costs and assess affordability and whether you as a first-time applicant qualify for a home loan. We also offer innovative alternatives to traditional bonds which could see you paying far less in the long term and paying off your loan over a shorter period of time.

Make a formal enquiry with Homeloan Junction

At Homeloan Junction we make it our business to keep the home loan application process as simple and straightforward as possible. Talk to us today about how you can successfully secure your loan. We can help you with all the documentation needed to make a formal application at a bank. For more information on whether you meet all the criteria and what you can do to make sure you qualify, contact Homeloan Junction today.